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Gift Card vs. The Prepaid debit card: What’s the Better Gift? Advertiser disclosure You’re our first priority. Every time. We believe that every person should be able to make financial decisions with confidence. While our website doesn’t feature every company or financial product that is available on the market, we’re proud of the guidance we provide, the information we provide and the tools we create are independent, objective easy to use and cost-free. How do we earn money? Our partners pay us. This could influence the types of products we review and write about (and the places they are featured on the website), but it does not affect our advice or suggestions which are based on many hours of research. Our partners do not pay us to guarantee favorable reviews of their products or services. . Gift Card or. Prepaid Debit Card: What’s the Better Gift? Gift cards are the clear winner when it comes to a simple exchange of cash. Prepaid debit cards are more like bank accounts. Written by Spencer Tierney Senior Writer | Certificates of Deposit and ethical banking, as well as banking deposits Spencer Tierney is a consumer banker writer at NerdWallet. He has covered personal finance since 2013, with a focus on certificate of deposit as well as other banking-related issues. He has had his work featured on The Washington Post, USA Today, The Associated Press and the Los Angeles Times, among others. The location is Berkeley, California. Dec 22nd, 2022 Edited by Sara Clarke Assistant Assigning Editor | Banking Sara Clarke is an editor who joined NerdWallet with two decades of experience working in newsrooms, most recently at U.S. News & World Report. Her journalism career began at The Washington Post and later was employed by Roll Call, McClatchy-Tribune and The Seattle Times. Sara has been featured on SiriusXM Business Radio and iHeartMedia’s WHO Newsradio and has been featured on The Salt Lake Tribune, The St. Paul (Minnesota) Pioneer Press and other publications. She graduated at the Maryland University’s Philip Merrill College of Journalism. Email:

. A majority or all of the products we feature are made by our partners, who pay us. This impacts the types of products we review and the location and manner in which the product is featured on the page. But, it doesn’t affect our assessments. Our opinions are entirely our own. Here is a list of and . Cash is an easy gift option, but what format it should be in is another question. Putting bills into an envelope may be a good idea however, it’s not the most ideal: There’s no way to get cash back if it is stolen or lost. It’s also easy to forget that cash was given as a gift after it’s placed in a purse. Storing cash on plastic cards is better, provided you choose wisely among gift cards or prepaid debit cards. Here’s what to know. Gift cards are different from. Prepaid debit cards Let’s start with the similarities between them They’re both debit cards that are prepaid, which means you pay for the card prior to purchases at stores in stores, both physical and online. They also provide protection against loss when you sign them under your name. It is possible to find both kinds of cards in the same area of a retailer, like Walgreens, so be sure you know which one you’re picking up. The major distinction between a gift card and a prepaid debit card is that the gift card is an instant spending card and a prepaid card is a rechargeable payment option with the most features and charges associated with a checking account as well as linked debit cards have. Gift cards have one job: to buy goods at the brand of a specific store or any retailer which accepts a payment system such as Visa, Mastercard or American Express. They aren’t able to withdraw cash and the majority aren’t rechargeable. Prepaid debit cards can be used for a variety of tasks: purchase items; withdraw cash from ATMs, banks or certain shops; or also use internet-based features, such as bill pay. They’re also reloadable. Because of their flexibility they can be used as budgeting tools, or as a replacement to checking account. They’ve historically been used to limit spending too much, but in recent times, there’s been more (a common cost when spending too much) and also to help track spending. >> MORE: Winner: Gift cards. Gift cards correspond to their word as gifts. Their simplicity is partly what makes them better to present. However, there’s a second reason. Prepaid debit cards typically have monthly fees like checking accounts do and the fees, often $5 to $10, can amount to up to $120 per year. There may be as well fees for transactions or inactivity fees. The gift card is the best option, but they’re not all equally good deals. The general-use gift cards like those offered by Visa and Mastercard, tend to have an upfront fee, commonly known as a purchase or activation fee, that the gift recipient is required to be required to pay. The cost could range from $2.95 to $5.95, depending on the amount that’s added to the credit card as determined by an assortment of gift card websites. However, there aren’t many fees after purchase. There are exceptions, though. Some banks offer general-use gift cards, which have replacement card fees or inactivity fees. These may get charged monthly after one year of card use. It is possible to avoid most, if not all, charges by purchasing a store brand gift card. In general, understand the terms and fees on a gift card before you purchase it, so that the gift you give to your loved ones brings joy with no fees attached. About the author: Spencer Tierney is an expert in certificates of deposit at NerdWallet. Its work was covered by USA Today and the Los Angeles Times. On a similar note… Get the best checking account NerdWallet’s top picks for the best checking accounts. Go deeper into Banking Get more smart money moves – straight to your inbox. Sign-up and we’ll send you Nerdy articles about the money topics that are important to you and other strategies to get more from your money.

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